Advertisement

Trump orders U.S businesses to stop dealing with China, owners say move will hurt profits

Click to play video: 'Pompeo talks China, trade during Indiana visit' Pompeo talks China, trade during Indiana visit
WATCH ABOVE: Pompeo talks China, trade during Indiana visit – Aug 27, 2019

President Donald Trump, under pressure to scale back a U.S.-China trade war partly blamed for a global economic slowdown, claimed Monday that the two sides will begin serious negotiations soon.

Trump said his trade negotiators had received two “very good calls” from China Sunday, hours after Trump waffled on whether he regretted the one-upmanship on tariffs Friday. Trump at first seemed to express regret over the escalating trade war, but the White House later said Trump’s only regret was that he didn’t impose even higher tariffs on China. Trump claimed the Sunday evening conversations were a sign China is serious about making a deal.

WATCH: Trump on escalating trade war with China: ‘I have second thoughts about everything’

Click to play video: 'Trump on escalating trade war with China: ‘I have second thoughts about everything’' Trump on escalating trade war with China: ‘I have second thoughts about everything’
Trump on escalating trade war with China: ‘I have second thoughts about everything’ – Aug 25, 2019

“I think we’re going to have a deal, because now we’re dealing on proper terms. They understand and we understand,” Trump said as he met with Egypt’s president on the sidelines of the Group of Seven summit in France.

Story continues below advertisement

“This is the first time I’ve seen them where they really want to make a deal. And I think that’s a very positive step,” Trump added.

Trump declined to identify those involved in the most recent conversation and whether he is in direct contact with President Xi Jinping. Trump added Monday that the two sides will begin ‘talking very seriously,” saying that after the calls he believes the Chinese ”mean business.”

A Chinese delegation had been expected to travel to Washington in September to continue talks and that remained the case even after Trump’s escalation following China’s tariff announcement last Friday.

WATCH: Trump says China tariffs ‘doing very well’ for the U.S.

Click to play video: 'Trump says China tariffs ‘doing very well’ for the U.S.' Trump says China tariffs ‘doing very well’ for the U.S.
Trump says China tariffs ‘doing very well’ for the U.S – Aug 23, 2019

It was unclear if Trump was referring to the previously scheduled talks next month or some other conversations. There was no immediate comment from the Chinese.

Story continues below advertisement

Although Trump has told U.S. companies to stop dealing with China, small business owners say complying would hurt, even devastate them.

If Vanessa Topper can’t work with a manufacturer in China, “I’m going to have to fold a quarter of my business,” she says.

About 25 per cent of the promotional products Topper sells are imported from China. She estimates that if she were to look for a supplier in another country, it would cost her company, TopNest Designs, at least $100,000 and she would risk losing clients, companies that produce wine, beer and liquor.

READ MORE: Asian shares fall as U.S.-China trade war reignites uncertainty

Topper, whose business is based in Tiburon, California, says she can’t afford to go to a country like Vietnam to meet with manufacturers. Moreover, the process of finding a new supplier would take months, and she has no guarantee that the merchandise would meet her customers’ requirements.

Small businesses individually and as groups say their revenue and profits have been hurt by the trade wars that began with Trump’s imposition of 25% tariffs on Chinese-made raw materials and products last year. Since then, Trump has expanded the tariffs on the goods U.S. companies import, and China has responded with tariffs of its own on items exported from the U.S. On Friday, China announced it was raising tariffs on $75 billion in U.S. imports, after which Trump’s “ordered” that U.S. companies find alternatives to doing business with China.

Story continues below advertisement

WATCH: U.S. President Donald Trump is making headlines at the G7 summit by saying he’s had second thoughts about his trade war with China.

Click to play video: 'Trump admits ‘second thoughts’ on trade war with China' Trump admits ‘second thoughts’ on trade war with China
Trump admits ‘second thoughts’ on trade war with China – Aug 25, 2019

Trump softened the threat Sunday, saying he would only consider it if China again responded with raising tariffs on American goods.

Companies of all sizes have seen their costs rise because of the tariffs, and some have lost business as their customers reject higher-priced goods. But the tariffs take a greater toll on smaller companies that don’t have the financial resources to shift their manufacturing to other countries.

“It’s not as easy as a tweet to find alternatives. And time spent finding alternatives is time spent not growing the business,” says Karen Kerrigan, president of the advocacy group Small Business & Entrepreneurship Council.

READ MORE: China says it wants a ‘calm’ resolution to ongoing trade war with U.S.

Story continues below advertisement

But in some industries, there are few or no alternatives. Manufacturers, importers and retailers are forced to pay the tariffs.

“There’s nothing I can do about where the products in my store are sourced from,” says Tiffany Zarfas Williams, owner of The Luggage Shop of Lubbock, Texas. “That’s way behind my control. I’m at the mercy of my manufacturers, and changing factories and finding new sourcing options take years.”

The vast majority of luggage sold in the U.S. is made in China. But even if it were made domestically or in other countries, “that doesn’t even address the issue that all of the parts and pieces that make luggage are all made in China as well,” Williams says.

WATCH: Trump administration admits trade war with China now directly tied to outcome in Hong Kong

Click to play video: 'Trump administration admits trade war with China now directly tied to outcome in Hong Kong' Trump administration admits trade war with China now directly tied to outcome in Hong Kong
Trump administration admits trade war with China now directly tied to outcome in Hong Kong – Aug 19, 2019

Peter Horwitz, owner of Tiger Packaging, a paper and plastic products supplier based in Boca Raton, Florida, has shifted most of his manufacturing away from China in recent years. But he’s unable to find suppliers in other countries for some of his products, including vinyl gloves. He’s looked in the U.S. but found none.

Story continues below advertisement

“We’d much rather support our own. But the reality isn’t like that, unfortunately,” he says.

Sponsored content